Poland's PKN Orlen rules out shale gas venture with Canada's Encana

LONDON (ICIS)--?xml:namespace>Poland's PKN Orlen has ruled out forming a shale gas exploration partnership with Canadian energy firm Encana, the company said on Wednesday.

However, its shale gas activities would soon benefit from a very substantial increase from its own capital on the zlotych (Zl) 500m ($159.2m, €120.2m) committed to exploring for unconventional gas over the next two years, Orlen added.

Orlen said it was too early to enter into shale gas partnerships with foreign entities due to the unclear potential of its shale gas concessions.

Its comments followed a letter sent to Polish state-controlled firms, including Orlen, by recently-appointed new treasury minister Mikolaj Budzanowski in which he advised that shale gas partnerships should currently be limited to domestic companies.

In a note to investors, Prague-based investment bank Wood & Company cautioned that it believed it would be “hard [for the Polish firms] to explore shale gas deposits without foreign partnerships, as Polish companies do not have the special know-how”.

In late January, Wood & Company expressed scepticism about Budzanowski's call for an acceleration of shale gas exploration efforts and drilling activities in Poland, saying the necessary expertise, know-how, technologies and support operations are not yet fully available in the country.

Orlen and Encana's deal would have involved Encana investing $200m (€150m) in Orlen-led shale gas exploration in eastern Poland, with Orlen receiving access to Encana’s deposits in the US, according to the bank.